Nigeria government debits banks after $10bn claim on MTN

Nigeria government debits banks after $10bn claim on MTN

MTN Nigeria.jpg

Nigeria’s central bank has forcibly withdrawn $16 million from four banks in a dispute with MTN following allegations that the telco broke its rules on capital importation.

The Central Bank of Nigeria (CBN) is claiming that MTN had “illegally repatriated” more than $8 billion, but MTN says it has certificates of capital importation (CCIs) covering the imports.

At the same time the Nigerian attorney general, Abubakar Malami, is saying that MTN owes $2 billion in unpaid tax. South African-owned MTN denies both claims.

The CBN debited the accounts of Standard Chartered Bank, Stanbic IBTC, Citibank Nigeria and Diamond Bank with sums totalling 5.87 billion naira ($16 million). Standard Chartered was debited the bigges sum, 2.4 billion naira ($6.67 million).

MTN is denying claims from Nigeria that it owes $2 billion in tax – putting the country’s claims on the South African company up to more than $10 billion.

In a statement, MTN said the tax claim referred to “import duties, VAT and withholding taxes on foreign imports/payments”.

MTN said it “continues to strenuously deny the allegations being made by the Central Bank of Nigeria and has provided further clarity on the company’s position. MTN equally strenuously rejects the findings of the attorney general’s investigation and believes it has fully settled all amounts owing under the taxes in question.”

It’s only two years since MTN Nigeria had to pay a fine of $1.67 billion for having unregistered SIM cards on its network, having negotiated it down from $5.2 billion. Nigeria required all operators to register its customers’ SIM cards as part of its fight against terrorism.

The company said that “it is both regrettable and disconcerting that despite the historic engagements with the Nigerian authorities by MTN Nigeria, the senate investigation into the CCI [certificate of capital importation] matter, and the multiple tax assessments done by the Nigerian tax authorities over many years that were satisfactorily concluded, that these matters are being reopened”.

The company’s corporate relations executive Tobe Okigbo said: “From the CBN’s own letter and subsequent statements, it is clear that there is no dispute that the capital captured in MTN’s books and for which CCIs were issued was imported into Nigeria, and this is acknowledged explicitly by the CBN.”

It added: “It is equally clear that Nigerian law provides for guaranteed unconditional transferability of funds through an authorised dealer in freely convertible currency relating to dividends or profits attributable to the investment, payments and in respect of loan servicing where a foreign loan has been obtained.”

He went on to say: “All dividend repatriation done by MTN Nigeria to its shareholders was done on the basis of its equity capital and all the historic dividends were declared against valid equity CCIs and in fact no preference dividends were declared and no interest in respect of these preference shares was paid.”

Okigbo added: “This means that it is incorrect to suggest that the conversion of a shareholder loan to preference shares has any relation to the repatriation of dividends. The two are simply not connected and we are trying to understand this position that the Central Bank has taken.”

Speaking on the attorney general’s tax demand, Okigbo said: “MTN has conducted a detailed review of these claims, and provided evidence of tax remittance to the attorney general’s office. The attorney general’s notice indicates that he is rejecting this evidence.”

He added: “We believe that all taxes due to the Nigerian government have been paid and these allegations have not been raised by any of the revenue generating agencies that MTN engages with regularly, and from whom MTN has received numerous awards for compliance.”


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